IATA says taxes, costs, red tape grounding Indian aviation

India’s aviation sector is in a multi-faceted crisis crippled by high costs, exorbitant taxes and insufficient infrastructure, the International Air Transport Association (IATA) said on Wednesday.

India’s aviation sector is in a multi-faceted crisis crippled by high costs, exorbitant taxes and insufficient infrastructure, the International Air Transport Association (IATA) said on Wednesday.

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IATA represents some 240 airlines comprising 84% of the global air traffic.

“The high cost of doing aviation business in India is squeezing the lifeblood out of the airline sector. Infrastructure costs and taxes need urgent attention,” said Tony Tyler, director-General and CEO, IATA, in his keynote address to the Confederation of Indian Industry.

“Kingfisher’s situation is dire. And Air India (AI) is on government-provided life-support of financial bailouts and other forms of protection,” he said. “Airline losses approached $2 billion in the year ended March 2012, after losing $3.5 billion over the previous three years.

“In the case of AI, long-term state-aid has not rehabilitated the business and in the meantime it is having a destructive impact on the market. Even with government commitments, we are still waiting to be proven wrong. Government aid must not be a blank cheque," he said.

Tyler said the 346% increase in Delhi airport charges will add over $400 million in operating costs for airlines.